Earthquakes and dollar fail to rattle PharmaZen

For Immediate Release

April 21, 2011

Earthquakes and dollar fail to rattle PharmaZen

Despite the on-going drag of a stubbornly high New Zealand dollar and the September earthquake, biotechnology company PharmaZen is pleased to report both an increase in volume and profit as well as a lift in confidence for the future.

For the 12 months ending December 31, 2010, PharmaZen reported a surplus before tax of $482,338 on turnover of $6,277,516. This compares with a before tax surplus of $186,088 on turnover of $5,209,442 for the previous 12 months.

PharmaZen chief executive, Craig McIntosh, said while the biggest single challenge for the company remains the strength of the New Zealand dollar, the company is no longer dependent on the dollar to be profitable, rather it is the level of profitability that is impacted.

“Compared with 2009, the New Zealand dollar was up 13% against the United States dollar and 20% against the Euro in 2010,” he said.

Investment in new plant in the last few years is starting to pay dividends with significant increases in efficiency.

“Volumes in production terms were up by 30% last year, but because of our recent investment in the plant we are putting product through at less than two thirds the cost of 2005, which is a significant achievement given rising costs.”

While the Canterbury earthquakes (September and February) provided some challenges, damage to the site was largely external.

“The September quake caused some disruption to our supplies, the bulk of which were held in a third party storage premise which was badly damaged. In the February quake, which was centred much closer to our site, we again came through relatively unscathed, although disruption to the Christchurch utility supply was significant.

“Power was available three days after the quake and we were able to secure a supply of water that could be trucked in, allowing us to recommence on the Monday, less than a week after the quake.

“It is extremely pleasing to note, that despite the significant disruption to utilities and the number of staff with challenging personal circumstances, we were able to recommence operations relatively quickly and as such, maintain supply continuity for our customers,” he said.

With a strong balance sheet and excellent cash flow, PharmaZen has commenced a range of initiatives to take the company to the next level. These include but are not limited to:
• Completion of a 200 sq. m. onsite freezer
• New dry side plant with GMP capabilities
• $250,000 investment in clinical trials to validate recent product developments, co-funded by the Foundation for Research Science and Technology.
• CEMARS certification – carbon footprints are set to become an increasingly topical issue for exporters and it is deemed important financially, morally and marketing wise for the company to be active.

“The growth in demand for products continues to be strong and this will no doubt be supported further with favourable clinical trials. Against this, however, the forecast for 2011 exchange rates sees the New Zealand dollar maintaining levels against the US well above that of 2010,” he said.

The AGM will be held at the clubhouse, Otago Golf Club, 24 Balmacewen Road, Dunedin, on May 27 at 12.30pm

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